Thursday, April 8, 2010

Markets can only edge higher

Dow rose 29, advancers ahead of decliners by 15% & NAZ was up 5. Buyers returned but were not able to break the Dow out of its trading range for this week. Banks did well, buyers must have been inspired by testimony former execs gave in DC about the Citigroup collapse. These multi millionaires said they were sorry others were badly burned but since they didn't have a clue what was going on, they were not responsible. Tonight they are taking private jets back to New York, wherever. The Financial Index extended its 2 month run to another 18 month high


% Change

The Alerian MLP Index started by selling off but recovered to reach yet another 2½ year high. Then it backed off in the final hour to settle for a gain of "only" 1.06 at 311.91 (a tad below the prior 2010 high). This also takes it nearer its 342 record high. The comparable index, which includes reinvested income, is already at record highs, over 800. The REIT was down pennies. Junk bond funds rose but Treasuries pulled back after yesterday's big rally. The yield on the 10-year Treasury bond gained 3 basis points to 3.90% & may be looking to make another run at the 4% ceiling.

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD

Oil regained some of the AM loss while gold was flat. Commodities will be influenced by, among other things, talks to raise the value of the Chinese currency, a complicated issue.

CLK10.NYM..Crude Oil May 10..85.60 ..Down 0.28

GCJ10.CMX..Gold Apr 10..1,150.30 ..Down 1.40

The Treasury sold $13B of 30-year bonds with a yield of 4.77% pretty much matching the forecast yield of 4.768%. This was the final of 4 auctions for this week, totaling $82B. The Treasury benefited from a 9.5 basis point decline for this bond in yesterday's rally. However, these yields are still near the highest levels in 2½ years. The bid-to-cover ratio was 2.73X compared with an average of 2.55X at the last 10 auctions. Indirect bidders, which include foreign central banks, bought 36.8% of the bonds after purchasing 23.9% at the Mar sale & 28.5% at the Feb offering. Overall it was rated as a "good" auction.

Treasuries Decline After $13 Billion Auction of 30-Year Bonds Bloomberg

Markets found a few buyers in the PM, but they didn't take the averages significantly higher. Dow is still in its sideways band. Fri & Mon will probably be more non event days, waiting for Alcoa (AA), Dow stock, to kick off earnings season Mon evening. Commodities have been strong in the last couple of months, so they should be able to report good earnings. Traditional industrials won't have those following winds.

Dow Jones Industrials --- 1 week

Dow Jones Industrials --- YTD

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